Social Policy in Mexico and Argentina
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Working Paper No. 921 Social Policy in Mexico and Argentina by Martha Tepepa Levy Economics Institute of Bard College January 2019 The Levy Economics Institute Working Paper Collection presents research in progress by Levy Institute scholars and conference participants. The purpose of the series is to disseminate ideas to and elicit comments from academics and professionals. Levy Economics Institute of Bard College, founded in 1986, is a nonprofit, nonpartisan, independently funded research organization devoted to public service. Through scholarship and economic research it generates viable, effective public policy responses to important economic problems that profoundly affect the quality of life in the United States and abroad. Levy Economics Institute P.O. Box 5000 Annandale-on-Hudson, NY 12504-5000 http://www.levyinstitute.org Copyright © Levy Economics Institute 2019 All rights reserved ISSN 1547-366X ABSTRACT This paper is a comparison between two programs implemented to combat poverty in Latin America: Prospera (Prosper) in Mexico and Asignación Universal por Hijo (Universal Assignment for Child) in Argentina. The first section offers a review of the emergence of the welfare state, examining economic and urban development in both countries and the underlying trends of social policy instruments. The analysis is based on the political nature of social problems and the actions undertaken to confront them. The paper offers a theoretical perspective, often questioning the very foundation of the social policy that serves as the main framework for the social programs, in order to present the policies’ scope, successes, and disadvantages with reference to social equity and the well- being of their participants. KEYWORDS: Social Policy; Welfare State; Conditional Cash Transfers; Argentina; Asignación Universal por Hijo; Plan Jefes y Jefas de Hogar Desocupados; Mexico; Prospera; Latin America. JEL CLASSIFICATIONS: H75; I30; I38; O18; O19; O57; P52 1 Economic growth has been shown as a necessary but not sufficient condition for raising the standard of living for the majority of the population. Social policy, on the other hand, has been recognized as a way to level the ground for all members of society. So, it seems obvious that in order to guarantee the well-being of all the population it is necessary to establish a link between economic and social policies. Social programs are nets that catch those that have been pushed out of the market and, ideally, provide the resources and means to live a dignified life without vulnerability and deprivation. The impact of any social policy on the population’s standard of living will undoubtedly depend on the type of program that is implemented (Gordon 2004). Through the history of Latin America, continuous economic crises have left a large portion of the population living under precarious conditions; thus, the importance of social policies that guarantee the well-being of all. This paper compares the main social policy instruments used to tackle poverty in Mexico and Argentina. The analysis offered here is not a technical-economic evaluation using metadata and specialized consultants, such as those commissioned by governments. On the contrary, based on the political nature of social problems and the actions undertaken to confront them in both countries, it offers a theoretical perspective—often questioning the very foundation of the social policy that serves as the main framework for specific programs—in order to present the policies’ scope, successes, and disadvantages with reference to social equity and the well-being of their participants. The first section offers a review of the emergence of the welfare state in both countries. It then examines the historical trend of social policy instruments through the debt crisis, the adjustment programs of the 1990s, and the financial crises of 1994 in Mexico and 2001–2 in Argentina, with emphasis on the Programa Jefes y Jefas de Hogar Desocupados (Unemployed Head of Household Program). 2 The second section offers a comparison between the main programs employed to combat poverty at the federal level: the Prospera (Prosper) program in Mexico and the Asignación Universal por Hijo (Universal Assignment for Child) in Argentina. The paper closes with some conclusions. INTRODUCTION The urban development process and political and economic characteristics serve as starting points for identifying the challenges nations face in meeting the demands of their populations. Mexico and Argentina have important differences that are decisive when addressing the welfare state, specifically, the social policies directed to those living in poverty. Table 1 offers a general comparison between both countries, focusing on their population density, age structure, and urban population. In 2017, Mexico had a population of 123.5 million, more than half (65.2 million) of whom were under 29 years old. The current life expectancy is 75 years. Estimates show that in 2005, approximately 580,000 Mexicans emigrated, a figure slightly higher than the number of those who died in the same year (501,000). Argentina, with a population of 44.1 million people, maintains a very low population density, with 16 inhabitants per square kilometer. In 2016, the life expectancy was 76 years. The country has low levels of emigration and is a net recipient of immigrants for South America. 3 Table 1. Demographic Summary of Mexico and Argentina Population Total population Age structure Urban population density (millions) 2 (percent of total population) (percent of total) (people/km ) Area km2 1980 2000 1970 2017 1970 2017 1970 2017 0–14 15–64 65+ 0–14 15–64 65+ ARG 2,766,889 23.9 44.1 8.7 15.9 30.5 61.4 8.1 27.7 62.6 9.7 78.4 92.0 MEX 1,972,547 50.3 123.5 25.5 62.6 45.1 51.1 3.8 33.2 62.1 4.7 59.0 80.0 Source: http://data.un.org/ Urbanization Argentina reached a high degree of urbanization in the early 1910s: “According to the census data [in 1914] ... under a third of the inhabitants lived in medium or large cities of 50,000 people or more, while the urban population surpassed the rural. Of these urban contingents, 25.4% of the population (more than 2 million people) resided within the area currently known as the Great Buenos Aires” (Rapoport 2003, 135). Unlike Argentina, Mexico was considered an urban society until the last quarter of the 20th century. Well into the 1980s, more than half of the Mexican population resided in localities of at least 15,000 inhabitants. Table 2 shows the distribution of urban population by city size in Mexico since 1900. The remarkable increase in the urban population—given the exodus from the countryside to cities, along with the change in the economic model1 in the 1990s—implied not only a significant expansion of the urbanization process but an increase in social inequalities, including the 1 Through Mexico’s modern history, several administrations have pursued policies that reflect their approach to economic growth. From 1940–82 governments emphasized industrialization as the vehicle for economic growth. Public investment in infrastructure and social expenditure on education and health established a hefty public sector. Under what’s known as the “import substitution model,” the State regulated financial transactions and trade, invested in strategic sectors, and subsidized agriculture. After the debt crisis in 1982, every administration has adopted the recommendations of international organizations and financial institutions, implementing structural reforms and adjustment plans that have completely changed the approach to economic growth. The State has contracted its role, thus, the public sector has been reduced through privatizations or liquidations of public enterprises and services. Regulations have been eliminated and the trade, agriculture, energy, and financial sectors have been opened to foreign capital. 4 differentiated access to public services and housing. Along with these urban challenges, the presence of highly marginalized communities, inhabited mostly by indigenous people,2 adds to the need for effective social policies for the poor. According to the National Population Council, 95.5 percent of communities inhabited by indigenous people have high marginalization indexes: “The population of marginalized localities amounts to 7.1 million people, 90.8 percent are indigenous people; 48 percent of municipalities with indigenous population present high marginalization, while 82 percent have very high marginalization” (Conapo 2000). 2 There are approximately 50 million indigenous people divided into 410 different ethnic groups in Latin America and the Caribbean. Almost 90 percent of the indigenous population in Latin America is concentrated in five countries: Peru (27 percent), Mexico (26 percent), Guatemala (15 percent), Bolivia (12 percent), and Ecuador (8 percent). After centuries of exclusion and domination, indigenous and Afro-descendant peoples present the worst economic and social indicators. They have little cultural recognition, no access/representation in decision-making bodies, and face ethnic and racial discrimination. In Guatemala, Mexico, Bolivia, and Peru, more than 60 percent of the indigenous population lives in poverty (Hopenhayn 2005). 5 Table 2. Mexico: Distribution of Urban Population by Size of Cities, 1900–2005 15,000 to 20,000 to 50,000 to 100,000 to 500,000 to 1 million or Year Total urban 19,999 49,999 99,000 499,999 999,999 more 1900 Population a 1,435 173 536 280 446 - - Cities b 33 10 17 4 2 - - 1910 Population 1,783 115 715